S&P 500 index gains after recent selloff; energy stocks fall

(Reuters) - The benchmark U.S. S&P 500 stock index ended up slightly on Monday after two days of declines, though a drop in oil prices weighed on energy shares and tensions between the United States and North Korea kept investors on edge.

Market participants began to turn their focus to the Federal Reserve meeting at Jackson Hole, Wyoming later this week which will be attended by Fed Chair Janet Yellen, European Central Bank president, Mario Draghi, and other global central bankers.

Investors are looking for further direction on where monetary policy is headed given persistently low inflation in the U.S. and Europe. Fed Vice Chair William Dudley, who has in the past supported accommodative monetary policy, earlier this month said that the recent easing in financial conditions, despite Fed interest rate increases, is a reason to keep plans to tighten policy in place.

“That confluence of strong growth and low inflation, which is somewhat like nirvana for equity investors, we don’t think can last forever,” said Wayne Wicker, chief investment officer at ICMA-RC in Washington.

“We’re hopefully getting a couple of more data points to see where the Fed takes their temperature on where they’re feeling the economy is at this juncture so that we can anticipate if something happens in the fourth quarter or not.”

Geopolitical concerns are still weighing on investor sentiment also. The United States and South Korea began their annual autumn joint military exercises on Monday, heightening tensions with North Korea, which called the drills a “reckless” step towards nuclear conflict.

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Still, absent U.S. economic data and with the second-quarter earnings nearly over, “it’s a quiet Monday and people are still feeling the effects of last week... there’s just not a whole lot of catalysts,” said Ian Winer, head of equities at Wedbush Securities in Los Angeles.

U.S. stock futures trading volume fell during the two hours that people left their offices to get a glimpse of the first total solar eclipse to unfold across the country in nearly a century.

About 174,000 S&P 500 e-mini futures ESc1 futures changed hands over the two hour period ending 3:30 p.m. E.T. on Monday, down about 46 percent for the comparable period last year. [L4N1L74AA]

A street sign for Wall Street is seen outside the New York Stock Exchange (NYSE) in New York City, U.S., December 28, 2016. REUTERS/Andrew Kelly/File Photo

Johnson Controls (JCI.N) rose 3.3 percent to $38.27, among the top S&P 500 gainers, after saying its CEO change would happen earlier than announced.

Herbalife (HLF.N) surged 9.8 percent after the nutritional supplement maker said it would buy back $600 million of shares after ending talks to be taken private.

Declining issues outnumbered advancing ones on the NYSE by a 1.01-to-1 ratio; on the Nasdaq, a 1.30-to-1 ratio favored decliners.

The day’s volume was among the lowest of the year, with 5.3 billion shares changing hands on U.S. exchanges, compared with the 6.3 billion daily average for the past 20 trading days, according to Thomson Reuters data.

Additional reporting by Saqib Iqbal Ahmed, Chuck Mikolajczak and Dion Rabouin in New York and Sruthi Shankar in Bengaluru; Editing by Clive McKeef